One cornerstone fiduciary duty owed by officers is a duty of loyalty, which requires the agent to act solely for the benefit of the corporate principal. There are many aspects to the agent's duty of loyalty. These include: not acting adversely to the principal without consent; not acting on behalf of one with interests adverse to the principal without consent; not competing with the principal; not wrongly appropriating a corporate opportunity; providing an accounting to the principal for profits; and not using or wrongly communicating confidential information. Moreover, as with the duty of loyalty for directors, an officer's duty may include not only a "non-betrayal" dimension, but also a more affirmative "devotion" aspect. This would require an officer to advance the well-being of the company, not simply refrain from harming it.

A lot of that explication seems to apply to Ward and McClendon's Heritage Management Company hedge fund. The fund was not disclosed to shareholders. Its operation was not undertaken for the benefit of shareholders. Its profits were neither shared with shareholders nor disclosed to shareholders. Why not?

It's not like Chesapeake was a stranger to trading -- the company has booked profits of $8.4 billion on its corporate oil and gas hedging in recent years. If the co-founders of the company identified new ways to profit from trading natural gas, why didn't they present that opportunity to the company instead of keeping it for themselves?

This has raised a host of questions. Did they profit off of non-public information about Chesapeake's trades? Were they front-running? Did the hedge fund pay rent to Chesapeake for being allowed to operate from a Chesapeake building?

The company naturally says there was nothing improper going on and has assured me that McClendon and Ward only ever took long positions on natural gas. That is, they only bet that the price would go up. The company, on the other hand, being naturally long on gas (very, very long), would only have reason to enter into what's effectively short positions.

I'm not sure it matters what the hedge fund's positions were. But let's assume that indeed the hedge fund was always long. Given that the company's positions are always net short, could this mean that McClendon and Ward might have been acting as counterparties to their company's own hedging (even if through an intermediary)? That would be a colossal conflict of interest.

It's one thing for McClendon and Ward to exclude Chesapeake shareholders from their private investments in restaurants or real estate or NBA basketball (they joined up to buy the Seattle SuperSonics and turn them into the Oklahoma City Thunder). But when a business opportunity involves natural gas, and the opportunity is pursued from within Chesapeake's offices, it seems like shareholders have been cheated.

An analog: it's as if Ward and McClendon had a personal geologist who found a great new shale gas play, and instead of directing Chesapeake to buy into it, they just bought up all the acreage themselves for their own profit. How is trading their own gas book any different?

These men may have founded Chesapeake Energy, but once they took the company public it was no longer theirs but the shareholders. As directors and officers of the company they owed their shareholders a fiduciary duty to look out for their interests first. That's why shareholders gave them millions of dollars a year in salary and that sweetheart perk known as the Founders Well Participation Program. That should have been enough.

Tom Ward left Chesapeake in 2006 to found SandRidge Energy. He's off the hook for everything that's happened since then. But Aubrey McClendon has a lot of explaining to do.

Chesapeake shares were down 14.59% to $16.88 late Wednesday, the lowest point since early 2009.